Income Tax Severed Letters - 2009-09-18

Ruling

2009 Ruling 2008-0300931R3 - Ptnship contracting out pro services to ptner corp

Unedited CRA Tags
125(7) 56(2) 96(1)

Principal Issues: Whether the active business income earned by a professional corporation carrying out services for a partnership of which the professional corporation's director and shareholder is a member, would qualify for the small business deduction, and not be restricted under the rules for specified partnership income and personal services business.

Position: No, provided that the facts are accurate and the proposed transactions are carried out as described.

Reasons: The facts and proposed transactions, as described, conform to our requirements as set out in similar rulings.

Ministerial Correspondence

16 July 2009 Ministerial Correspondence 2009-0320681M4 - Government Service Contract Payments

Unedited CRA Tags
Regulation 237

Principal Issues: Whether changes to the T1204 form reporting instructions are necessary for situations in which an individual performs volunteer services for a federal department or agency.

Position: Changes might be considered. Referred to Marty Lybbert and Victor Dmitriew - High Risk Compliance Strategy Division/Underground Economy Section for their consideration.

Reasons: HRCSD is primarily responsible for this form.

Technical Interpretation - External

8 September 2009 External T.I. 2009-0315641E5 - Ski equipment as employment expenses

Unedited CRA Tags
8(1)(i) 8(10) 8(1)(f) 8(13)

Principal Issues: Whether ski equipment is deductible as an employment expense.

Position: Not deductible.

Reasons: Costs for ski equipment are capital expenditures and not deductible under paragraph 8(1)(f) by virtue of subparagraph 8(1)(f)(v). These costs are also not deductible under subparagraph 8(1)(i)(iii) as they are not supplies consumed directly in the performance of duties of employment.

2 September 2009 External T.I. 2009-0320591E5 - Employer-provided Free Tuition - Private School

Unedited CRA Tags
6(1)(a)

Principal Issues: The taxability of employer-provided free tuition to a private elementary/secondary school.

Position: Generally taxable.

Reasons: Question of fact.

XXXXXXXXXX 2009-032059
Michael Cooke, CA
September 2, 2009

1 September 2009 External T.I. 2009-0312451E5 - Employer-Provided Scholarship Program

Unedited CRA Tags
6(1)(a) 56(1)(n) 56(3) 118.5

Principal Issues: The taxability of amounts paid under an employer's scholarship program. In the first scenario, the amounts are paid by the employer for a post-secondary school educational program for an employee's family members. In the second scenario, the amounts are paid for the employee's education.

Position: In the first scenario, if the amounts are paid by an arm's length employer for a post-secondary school educational program for an employee's family member, the amounts are taxable to student. In the second scenario, whether the amounts are taxable to the employee as a benefit or not remain a question of fact.

Reasons: CRA's revised policy for employer-provided scholarship programs for first scenario and CRA's position outlined ITTN #13 for second scenario.

20 August 2009 External T.I. 2008-0296041E5 - Employer-Provided Scholarship Programs

Unedited CRA Tags
6(1)(a) 56(1)(n) 56(3) 118.6(2)

Principal Issues: The taxability of amounts paid under an employer's scholarship program.

Position: If amounts are paid by arm's length employer for a post secondary school educational program - taxable to student. If amounts are paid for an elementary or secondary school program - continue to be taxable to the employee as a benefit.

Reasons: CRA's revised policy for employer-provided scholarship programs.

Conference

5 June 2009 Roundtable, 2009-0316631C6 - CLHIA 2009 - Barbados Insurance Companies

Unedited CRA Tags
113(1); Part LIX of the Income Tax Regulations

Principal Issues: 1) Is a Barbados Exempt Insurance Company (EIC) eligible for exempt surplus treatment? 2) Is a Barbados EIC eligible for benefits under the Canada-Barbados Tax Agreement?

Position: 1) A Barbados EIC would be eligible for exempt surplus treatment only if it were resident in Barbados within the meaning of Article IV of the Canada-Barbados Tax Agreement; 2) No

Reasons: 1) Subsection 5907(11.2) of the Income Tax Regulations; 2) Article XXX(3) of the Canada-Barbados Tax Agreement

24 April 2009 Roundtable, 2009-0316701C6 - Gifting of Life Insurance Policies

Unedited CRA Tags
248(35) 248(37)

Principal Issues: Does the reply that the CRA gave to the APFF in October 2008 represent its current position?

Position: Yes

Technical Interpretation - Internal

25 August 2009 Internal T.I. 2009-0333751I7 - Apprenticeship Training Tax Credit

Unedited CRA Tags
s. 89, 38, 96 and 97 of the TA XXXXXXXXXX 127(9)

Principal Issues: Can an expenditure be taken into consideration for multiple purposes in computing the Ontario Apprenticeship Training Tax Credit, any of the Ontario research and development tax credits and the federal investment tax credit?

Position: It is a question of fact whether an expenditure qualifies for a particular credit. However, where an expenditure qualifies for the ATTC, any of the Ontario research and development credits and the federal ITC, the ATTC credit will reduce the expenditure base for an applicable Ontario research and development tax credit and the federal investment tax credits. However, the ATTC expenditure base should not be reduced by any federal ITC or any Ontario research and development tax credits.

Reasons: Under subsection 127(7) of the ITA, all Ontario tax credits are assistance. For the purposes of claiming the Ontario R&D credits and the ATTC, the relevant section of the XXXXXXXXXX TA deem federal ITCs not to be assistance and they also deem other Ontario credits not to be assistance. In calculating the expenditure base for the ATTC, subsection XXXXXXXXXX 89(19) of the TA specifically exclude from the definition of government assistance any tax credit under section 127 of the ITA as well as specific Ontario R&D credits.